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Auto enrollment growing among 403(b) plans – survey

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Nearly a quarter of 403(b) plans now provide auto-enrollment features, almost double what was offered just seven years ago, said a new survey from the Plan Sponsor Council of America and Principal Financial Group.

As of Dec. 31, 23.9% of the 580 non-profit organizations that sponsor 403(b) plans offered automatic enrollment in those plans, up from 21% a year earlier and 19% as of Dec. 31, 2015. At the end of 2010 only 12.3% of plans offered automatic enrollment.

Auto enrollment use is more prevalent among large plans. Among plans with 1,000 or more participants, 36.4% offer automatic enrollment. For plans between 200 and 999 participants, 33.7% offer it; for plans between 50 and 199 participants, 21.2% offer it; and for plans with up to 49 participants, only 8% offer automatic enrollment.

Of those plans offering the feature, 56.6% also offered automatic escalation features as of Dec. 31, up from 52% of plans at the end of 2016 and 43% in 2015.

Also according to the survey, 403(b) plans are continuing to streamline their investment lineups. The average number of options available for participant contributions is 25, down from a high of 31 at the end of 2013, the report said. The largest plans, however, have the highest average number of investment options. Among plans with 1,000 or more participants, there was an average of 37 investment options; for plans with between 200 and 999 participants, the average was 20. For plans with between 50 and 199 participants, the average was 24 investment options and for plans with fewer than 50 participants, the average was 19.

Non-profit organization executives sponsoring 508 plans representing 2.1 million participants responded to the survey in the spring. Total asset sizes were not provided.

The survey report is available on PSCA's website for purchase.